Bella Ltd. is a calendar-year corporation. Bella uses a periodic inventory system. Its financial statements for 2020 contained errors as follows: 
-Assume that the 2020 errors are not discovered in 2021. However, ending inventory at the end of year 2021 is recorded at correct amount. By how much will 2021 net income be over or understated?
A) $6,000 overstated
B) $4,000 understated
C) $4,000 overstated
D) $6,000 understated
E) There is no effect on net income.
Correct Answer:
Verified
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